Why Long-Term Care for U.S. Seniors is Headed for ‘Crisis’

The roller coaster often starts in the middle of the night with a long-distance phone call. “Miss Bowser,” the caller begins tentatively. “It’s about your Mother.”

And that’s how my chaotic ride through the years of taking care of Mom got going. It ended 10 years later when she died at the age of 90.

Throughout this downward spiral of life, I had power of attorney, giving me responsibility for all major decisions about her medical care, her money and ultimately how she died.

It was a journey through what the policy people call long-term care. And it was painful.

I exhausted her life savings of $200,000 in just a few short years paying for a one-room apartment and three meals a day in a retirement home.

I sold her house, many of her precious antiques and I uprooted her from her beloved Tidewater, Va., where she had spent more than 80 years. At one point I packed up her things, loaded them onto a U-Haul and drove her across country to an assisted living facility near where I lived in Colorado.

Many doctors, numerous hospital stays and a few years later, I packed her up again. But this time all she needed where she was going was clothing.

My mother had the distinction of finally being broke enough to qualify for Medicaid. It’s a government program that pays for 24-hour-a-day care in a nursing home. To her credit, she kept a stiff upper lip.

But I kept thinking: here was a woman who had survived the Great Depression and World War II. All the money she and my dad had saved in 40-plus years of marriage was gone.

And she was now spending her final days in a place where most of the residents were suffering from dementia, wore diapers and often could not distinguish one day from the next. The food was disgusting and the medical care was terrible.

Now that it’s over and I have had two years of hindsight, I can console myself in knowing that there are LOTS of Americans out there like me. They’re well-meaning. They love their parents. But they find out quickly that the current state of long-term care for the elderly is complicated and unfriendly — unless you have a money tree growing in the back yard.

The experts say that in just a few short years, as the population of baby boomers retires, long-term care of the elderly will become a national crisis. In fact, it’s estimated that 70 percent of Americans who reach the age of 65 will need some kind of long-term care for at least three years during their lifetime.

But Dr. Bruce Chernof — president and CEO of the SCAN Foundation, which focuses on senior issues — says this doesn’t have to be a crisis if Americans commit themselves to a national dialogue on long-term care and do it now.

Chernof was recently appointed to a commission created by Congress that will make recommendations to lawmakers about how to address the nation’s long-term care crisis. And in a series of papers released Wednesday, the SCAN Foundation detailed the depth of the current problem and highlighted some potential solutions.

I spoke with him about his thoughts on these issues earlier this week.

Betty Ann Bowser: First of all, Dr. Chernof, thank you so much for being with us today.

Dr. Bruce Chernof: It’s a good question because long-term care in many people’s minds is a nursing home. In 2013, that’s just not the case anymore. For the vast majority of folks, what this means is long-term services and supports that can be delivered in the home or in a community setting. Most people don’t understand that 70 percent of us — when we’re over the age of 65 — will need some form of long-term services and support. That could be a nursing home, but more than likely it will be in the community. And on average, we’ll need that for three years. So all of us should be planning for this.

Betty Ann Bowser: What does something like that cost?

Dr. Bruce Chernof: The average nursing home today costs about $81,000 a year. And part-time help at home and in the community is in the range of $21-$22,000 a year. So it’s not insignificant.

Betty Ann Bowser: Where in the world would the average American family lay their hands on $81,000 dollars?

Dr. Bruce Chernof: Well that’s why we think this discussion is so important. People need to plan, and we think planning needs to come in two forms. First, we all need to be aware that we will likely have needs as we age, and we should be talking to our family about them. We should all want to live with independence, dignity and choice. We should be able to talk about those things so that our friends and family know how to help us think and plan.

The other piece, which is what you’re alluding to, is that we need to plan financially. And sadly, there really aren’t that many tools out there right now for American families. There’s a very large misperception that Medicare pays for this. But these are not services provided by Medicare in the long-term, and families are left with few other choices. For some folks, purchasing long-term care insurance is an option, but it is expensive. So for many people, they have to rely on other resources or savings. That’s why we think new tools are really necessary for American families.

Betty Ann Bowser: What happens to a family when one of their loved ones who is elderly gets really sick, and they need all this care? They have their life-savings in the bank, and they need long-term care. What happens?

Dr. Chernof: Well, what happens to many of those families, actually, is that they spend through those resources. They’ve waited too long to buy long-term care insurance, so it’s not available to them because they’re either too ill or it’s too expensive — relative to the other expenses in their day-to-day lives. And so for most individuals, what it means is they end up having to spend those resources or savings to pay for various needs — it could be in the community, it could be in a nursing home.

Betty Ann Bowser: What exactly is the role of Medicaid in all of this, once the money has run out. Then the government picks up the tab for their care?

Dr. Chernoff: That’s correct. Once you spend down to the point of qualifying for Medicaid, the government then picks up the costs of long-term care needs. Now for most older individuals, they’ll still have their Medicare, as well. Medicare generally pays for the acute care components that you have. But when it comes to those long-term care needs, extended time in a nursing home, or extended community needs, those are often paid for by Medicaid.

Unfortunately, the Medicaid program was built in a different time and place. And while many states are working to re-balance their services and make more services available in the home and the community, for many folks, the only option may be in a nursing home.

Betty Ann Bowser: How common is it for a family to have to spend down their resources almost entirely before they qualify for Medicaid?

Dr. Bruce Chernof: It’s actually very common — far more common than people understand. And most families are not well-prepared, particularly right now, because we’ve gone through this incredible economic downturn. And for many seniors who’ve been living on a fixed income, whatever savings they’ve had have not kept up and/or are not delivering the kind of day-to-day income that they need to live. People are actually spending their savings, because, for example, they’re not generating enough income off their savings.

The other observation that’s really important is that for many seniors, their most valuable asset may be their home. And home prices in many parts of the country — while they’re starting to improve — are still underwater. And so that really important nest-egg that might have been a reserve is less strong today than it was a few years ago. So the likelihood for spending down goes up dramatically. And not just for folks who are close to being poor, but for middle-income folks who just aren’t prepared for the enormous cost that long-term care can bring.

Betty Ann Bowser: If you own a home, does Medicaid require that the home be sold?

Dr. Bruce Chernof: No, generally not. There is a limited number of assets a family can keep, and homes are generally not something that have to be sold, because you might have a spouse or others living in that home.

Betty Ann Bowser: One of the options that could be made available to people is long-term care insurance, but you seem to be implying that hasn’t worked very well.

Dr. Bruce Chernof: Well, it hasn’t to date for a variety of reasons. Let me start by saying: I do think the insurance model is a good one in this space, because we know that many people will have a need in the future, and there’s enough known about how much need is out there that it should be what we call an “insurable risk.” We ought to be able to get to the place where there is good insurance and good tools. But we haven’t been able to do that so far, and I think that’s true for a couple of reasons.

One, there needs to be broad uptake on long-term care insurance. It needs to be affordable and accessible. Long-term care insurance tends to appeal to a fairly narrow audience, and it tends to be fairly expensive. It’s also really important that we have products out there that people trust and believe will be out there when they need it. There have been concerns that “I’m buying a product today that I may not need for 20 years” and “Will it actually be there, will it be flexible enough and will it cover my needs?”

So while I do think that long-term care insurance is a good concept, we’re still not quite there in having the kinds of products out there, the kinds of tools out there that are accessible and available to most American families.

Betty Ann Bowser: Is this the kind of situation that most people just don’t really think about until the last minute … until they realize they’ve got a crisis on their hands of monumental proportions that could go on for years?

Dr. Bruce Chernof: Sadly, for many of us, that’s how this discussion begins, with an unexpected phone call, and sometimes a very unpleasant surprise. Somebody goes home for Thanksgiving and discovers Mom or Dad is very different than the last time they were home. We’ve got lots of families spread across the country, and that usual check-in call sounds OK, and then you get home and find things that you never expected to find … And between those kinds of events, and the middle-of-the-night phone call when you know, “Mom fell” or “Dad had a stroke in the middle of the night that no one saw.” That sets off a chain reaction that many families are not prepared for.

So that gets back to our earlier discussion about the two forms of planning we all need to be engaged in. One is family planning so that we’re talking about the dignity and choice and independence that we all want, and how we want that expressed in our lives, expressed in our health care. We also need to make sure there are tools to help families so they can prepare for those needs financially.

Betty Ann Bowser: What do you think the role of government should be in all of this? You’ve just been appointed to a commission that’s going to be looking into this issue and making recommendations …

Dr. Bruce Chernof: So, I think the work of the commission will be very, very important. I think among us, we have the obligation to come up with a small handful of pragmatic policy options that can help move this discussion forward. And when I say pragmatic, I mean that they have the opportunity to generate bipartisan support. Because vulnerable aging is not a partisan issue. It’s going to happen to all of us, regardless of what we believe along the political spectrum.

So I see public policy maybe helping to clear some of the challenges that have existed in creating low-cost, viable products. Helping to think about ways to create better access to those low-cost products through work or other kinds of choice options. And finally, I think there’s a real need for public policy to help educate people about the fact that we’re all going to get to this place where we might need a little bit of help in our lives. And it really isn’t about the scary discussion of “you could end up in a nursing home.” It’s the positive discussion that for all of us, a little bit of help may be necessary. And we’re going to want some say and control over that, and we need tools to make that possible.

Betty Ann Bowser: But do you think policymakers will ever make a substantive move on this? They’ve tried many times before and have gotten nowhere.

Dr. Bruce Chernof: I think for all elected officials in Washington, it should be a high priority. Because I firmly believe that you can’t solve the entitlement challenges in front of us without taking on this question of helping people plan for their functional needs as they age. The reality is that the medical system will always be the nightlight for people when something happens in their lives and when things spin out of control. So when things don’t go well in the middle of the night, the light’s always on in the emergency room. And solving these needs on the backs of the medical or Social Security system alone will never get us there. So if we’re serious about thinking about reimagining the entitlements that we currently have so they’re sustainable, we need to create an avenue to plan for these needs.

Betty Ann Bowser: You say in a report that the SCAN Foundation is releasing this week that time’s running out on this issue, and if anything meaningful is to be done, it needs to be done in the next five years. Why five years?

Dr. Bruce Chernof: The time is now. For those who might doubt that point, and say, “Every five or 10 years, we have a discussion about long-term care, and generally not a lot has come of it, and you know, the sky hasn’t fallen. Is this just another Chicken Little debate that we’re having here?”
And the answer is no, for a few very important reasons.

First, a new tool set needs to be available, and it needs to be available to people that are working so they have enough time to participate, to save, to create a large enough insurance pool to be able to manage the kinds of risks people will face over time. You need enough time to build the product, get the product out there and give folks the time to pay into it — whatever it is. I’m not presupposing any kind of particular product. And five years is about as fast as anyone could imagine doing that.

The idea is that we have so many boomers who are nearing retirement. If you wait more than five years, the majority of boomers will either be retired or be within five to seven years of retirement and it will be hard for them to save. They will then need to use the currently available mechanisms, Medicare and Medicaid or some form of long-term care insurance.

The other reason is the demography of the country is really changing. We are going to reach a point where there are going to be many fewer workers. Families are going to be smaller, there are going to be fewer people to rely on to do that caregiving for Mom or Dad as we watch the boomers move through their retirement and into their older age.

So the opportunity is now to put in place some solutions and still leave enough time for them to have really meaningful impact on people and their families.

Betty Ann Bowser: What happens if nothing meaningful is done in five years?

Dr. Bruce Chernof: I think we will have more of the same, meaning we will continue to watch people spend down in a period of time when people are likely to have fewer resources and needing to use the Medicaid system, which will be incredibly difficult, predominantly on states, because states pay such a huge portion of the Medicaid bill. But also on the federal government because they pay the other half of the puzzle. And ultimately on taxpayers, because we’re all paying for that.

Then the other observation I’d make, when things don’t go well, the first stop is usually the emergency room — and the second stop is upstairs in the hospital. And that’s a very expensive way to solve problems. And hospitals are not the safest places in the world for older people. We know that. So we will then leverage the Medicare system, which is really built predominately for acute care issues, to solve these dysfunctions in people’s lives because of functional needs, as opposed to medical needs. Again, not a very efficient use of resources.

So I worry that we will put incredible strains on both the Medicare and Medicaid programs in ways that they were never built to address in their original creation. I think that’s the risk of not taking action now.

Betty Ann Bowser: Can you see a day coming when all of these folks needing all this long-term care could literally collapse the Medicaid system?

Dr. Bruce Chernof: Well, I think that’s the risk that’s out there. I think we as a country would never stand for turning our backs on the most vulnerable elderly. But I do think it would create a great reckoning and very, very hard choices would need to be made in ways that most Americans can’t imagine right now. And I don’t think that in the long-term, just having this rest on the back of Medicaid — the way it’s currently constructed and with the current set of tools out there — is sustainable.

Betty Ann Bowser: Thank you, Dr. Chernoff, so much for joining us.

Dr. Bruce Chernof: Thanks so much for covering this. I hope that this is the beginning of an important discussion for your audience — for themselves and their own families — and that the nation as a whole pays more attention to this as we go through the entitlement debates in front of us.

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